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GuruFocus has detected 6 Warning Signs with Thermo Fisher Scientific Inc $TMO.
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Thermo Fisher Scientific Inc (NYSE:TMO)
Beneish M-Score
-2.48 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

Thermo Fisher Scientific Inc has a M-score of -2.48 suggests that the company is not a manipulator.

TMO' s Beneish M-Score Range Over the Past 10 Years
Min: -2.85   Max: -1.12
Current: -2.48

-2.85
-1.12

During the past 13 years, the highest Beneish M-Score of Thermo Fisher Scientific Inc was -1.12. The lowest was -2.85. And the median was -2.50.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of Thermo Fisher Scientific Inc for today is based on a combination of the following eight different indices:

M=-4.84+0.92 * DSRI+0.528 * GMI+0.404 * AQI+0.892 * SGI+0.115 * DEPI
=-4.84+0.92 * 1.1121+0.528 * 0.9982+0.404 * 0.9893+0.892 * 1.0771+0.115 * 1.0064
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0016+4.679 * -0.0246-0.327 * 1.1564
=-2.48

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $3,049 Mil.
Revenue was 4953.2 + 4490.9 + 4535.2 + 4294.8 = $18,274 Mil.
Gross Profit was 2278.8 + 2053.9 + 2078.5 + 1957.9 = $8,369 Mil.
Total Current Assets was $7,021 Mil.
Total Assets was $45,908 Mil.
Property, Plant and Equipment(Net PPE) was $2,578 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,758 Mil.
Selling, General & Admin. Expense(SGA) was $4,976 Mil.
Total Current Liabilities was $4,866 Mil.
Long-Term Debt was $15,372 Mil.
Net Income was 629.5 + 473.5 + 516.6 + 402.2 = $2,022 Mil.
Non Operating Income was 16.6 + -10.3 + -10.9 + 0.5 = $-4 Mil.
Cash Flow from Operations was 1205.9 + 771.8 + 889.5 + 289.1 = $3,156 Mil.
Accounts Receivable was $2,545 Mil.
Revenue was 4652.5 + 4123.2 + 4270.9 + 3918.8 = $16,965 Mil.
Gross Profit was 2108.3 + 1883.3 + 1941.8 + 1822.5 = $7,756 Mil.
Total Current Assets was $5,741 Mil.
Total Assets was $40,834 Mil.
Property, Plant and Equipment(Net PPE) was $2,449 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,688 Mil.
Selling, General & Admin. Expense(SGA) was $4,612 Mil.
Total Current Liabilities was $4,146 Mil.
Long-Term Debt was $11,420 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(3048.5 / 18274.1) / (2544.9 / 16965.4)
=0.1668208 / 0.1500053
=1.1121

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(7755.9 / 16965.4) / (8369.1 / 18274.1)
=0.45715987 / 0.45797604
=0.9982

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (7021 + 2577.8) / 45907.5) / (1 - (5741.2 + 2448.8) / 40834.3)
=0.79090998 / 0.79943332
=0.9893

4. SGI = Sales Growth Index

Ratio of sales in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=18274.1 / 16965.4
=1.0771

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI=(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1)) / (Depreciation_t / (Depreciaton_t + PPE_t))
=(1688.2 / (1688.2 + 2448.8)) / (1758 / (1758 + 2577.8))
=0.40807348 / 0.40546151
=1.0064

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI=(SGA_t / Sales_t) / (SGA_t-1 /Sales_t-1)
=(4975.9 / 18274.1) / (4612.1 / 16965.4)
=0.27229248 / 0.2718533
=1.0016

7. LVGI = Leverage Index

The ratio of total debt to total assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((15372.4 + 4865.8) / 45907.5) / ((11420.2 + 4146.3) / 40834.3)
=0.44084736 / 0.38121138
=1.1564

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(2021.8 - -4.1 - 3156.3) / 45907.5
=-0.0246

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

Thermo Fisher Scientific Inc has a M-score of -2.48 suggests that the company will not be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Thermo Fisher Scientific Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.4050.94640.990311.09440.94561.02840.98711.02421.1121
GMI 1.05950.97421.00640.97920.98020.97981.00220.95220.97030.9982
AQI 0.99820.95580.99371.01891.02381.00090.83381.24641.0110.9893
SGI 2.57051.07710.9631.04561.09351.08231.04641.29021.00451.0771
DEPI 0.43010.97541.03251.04811.01810.95841.00460.88171.00421.0064
SGAI 0.89320.98061.02940.98411.03450.99790.98171.10110.93781.0016
LVGI 0.91340.90881.01291.02271.8861.0061.19181.04250.92281.1564
TATA -0.0341-0.0208-0.0365-0.0203-0.0146-0.0315-0.0214-0.0173-0.0202-0.0246
M-score -1.77-2.56-2.70-2.54-2.67-2.62-2.64-2.28-2.52-2.48

Thermo Fisher Scientific Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.04670.98710.76880.87350.95781.02421.02490.98571.06411.1121
GMI 0.97220.95220.92530.91520.9420.97031.00021.01361.00960.9982
AQI 1.12471.24641.00980.9790.98241.0110.99320.99880.97430.9893
SGI 1.23141.29021.22481.13231.05941.00451.02581.04461.06951.0771
DEPI 0.96230.88170.73420.82690.92891.00421.0411.01681.04461.0064
SGAI 1.08741.10111.04521.00480.96470.93780.94090.95850.98371.0016
LVGI 1.27171.04250.93990.94910.94340.92280.99771.0121.18821.1564
TATA -0.0177-0.0173-0.0208-0.0123-0.0139-0.0202-0.0238-0.0267-0.0239-0.0246
M-score -2.39-2.28-2.64-2.59-2.55-2.52-2.53-2.57-2.53-2.48
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